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Biotech Stock Mailbag: Cyclacel Fallout, the Skinny on Vivus, Celldex's Crash

The bigger issue is Qnexa's peak sales potential. I'm seeing some silly estimates thrown around equating the weight-loss drug to Lipitor. C'mon, Qnexa is not the next Lipitor, which delivered $11 billion in annual sales to Pfizer (PFE) at the drug's peak. As my friend and fellow biotech/drug scribe Matt Herper from Forbes pointed out recently, no obesity drug has ever generated more than $1 billion in annual sales.

Qnexa may be the first drug to clear this hurdle, but, then, it may not because, as Herper explains, people who are forced to rely on a pill to lose weight are flakes. Lots of these people may try Qnexa but far fewer will stick with the drug for a year or two, if historical compliance and dropout trends are to be believed.

To Herper's view, I'd add that Qnexa, if approved only for obesity, is not likely to be reimbursed by insurance companies. That means patients are going to pay $90 or more every month out of their own pockets to stay on the drug. [Hint: You can join a very nice gym for the same money.]

Lastly, topiramate (one of the two active drug components in Qnexa) makes people's brain go fuzzy -- memory loss, difficulty with concentration and attention, even language difficulties. In the Qnexa clinical trials, 5.6% and 7.8% of patients on the mid- and high-dose, respectively, experienced cognitive-related adverse events. These side effects aren't likely serious enough to derail Qnexa's approval but they might definitely hurt the drug commercially.

J.T. writes, "First of all, congratulations on your last two calls on Vivus and Chelsea Therapeutics(CHTP). You were spot on. Although I have disagreed with several of your articles in the past, your assessment on both companies was fair and correct. Staying in the "fair" mode, I can sometimes be overly critical, so I offer you kudos when you're right. (By the way, I was wrong on both of those.)"

Thanks, J.T. You don't hear many people saying "I was wrong" these days. That's too bad. There is nothing wrong with being wrong. We all make mistakes. What's important is accountability -- acknowledging your errors, learning from them and congratulating those who get it right. I try hard to play by those rules, and I respect folks like J.T. who do the same.

JM asks, "Question regarding Celldex Therapeutics(CLDX - Get Report): Stock is pretty much flat for more than a year, then in January over the course of maybe four weeks it practically doubles in value. Then company sells more shares, and stock promptly falls back to where it was before January. What gives? Is this stock manipulation?"

No, it's just biotech. Remember the old biotech saw: You raise money when you can, not when you need. Celldex shares were up about 80% to 90% year to date so the company raised money opportunistically. It might suck for you if you were unlucky to buy Celldex at its recent high but the company is just playing by the biotech rulebook.
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